Miller Deep Value Strategy Increased Its Holdings in Nabors Industries (NBR) in Q2

Miller Value Partners, an investment management company, released its “Deep Value Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The first half of the year mirrored 2020, with tariff and Covid fears driving the VIX Index over 50 and the U.S. Economic Policy Uncertainty Index reaching an all-time high. In March 2025, the Economic Uncertainty Index peaked at 725, over 50% higher than in 2020. By April 8th, equity markets hit bottom and began recovering as both the Economic Policy Uncertainty and VIX Index started to decline. In the quarter, the Deep Value strategy had a -0.95% drawdown compared to +3.02% return for the S&P 1500 Value Index and +2.52% return for the S&P 600 Value Index. Year-to-date, the strategy's net returns are -13.63% vs +2.81% and -7.65%, respectively, for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Miller Value Deep Value Select Strategy highlighted stocks such as Nabors Industries Ltd. (NYSE:NBR). Nabors Industries Ltd. (NYSE:NBR) is a drilling and drilling-related services provider for offshore oil and natural gas wells.  The one-month return of Nabors Industries Ltd. (NYSE:NBR) was -2.23%, and its shares lost 59.24% of their value over the last 52 weeks. On August 7, 2025, Nabors Industries Ltd. (NYSE:NBR) stock closed at $33.36 per share, with a market capitalization of $486.245 million.

Miller Value Deep Value Strategy stated the following regarding Nabors Industries Ltd. (NYSE:NBR) in its second quarter 2025 investor letter:

"Our two largest detractors during the quarter were JELD-WEN (JELD) and Nabors Industries Ltd. (NYSE:NBR) and that were down 33% and 32% during the quarter, respectively. Both companies’ share prices are at deep discounts to what we believe is their long-term fundamental value, and we increased position sizes in both holdings during the quarter.

Nabors Industries (NBR) has undertaken a multi-year transformation focused on leveraging their industry’s leading technology. The company has over 450 patents, and has developed industry leading drilling automation/robotics, Rig Cloud platform and smart apps, rolling out globally, not only on Nabors rigs but also on third-party rigs. The company’s recent Parker Wellbore acquisition more than doubles the Nabors Drilling Solutions (NDS) segment, while further expanding their digital offerings and accelerating the transformation plan. Nabors NDS segment has very low capital intensity with 90% annual free cash flow conversion. As NDS becomes a larger portion of the business over time it should further accelerate future free cash flow generation and debt reduction.

With the recent share price weakness, Nabors looks extremely attractive, at less than one times forward cash flow – the only other period it has traded lower was a short time during the Covid 2020 outbreak. Current marketplace fears are due to falling commodity prices, and expectations for additional rig cancellations later in the year. While oil prices falling towards $50/barrel is a potential risk, we believe this marketplace fear is well known and significantly discounted in Nabors current share price today. Nabors hopes to realize at least $60M in annual merger synergies from the recently completed acquisition, and $200M+ of annual free cash flow generation and accelerated debt reduction..." (Click here to read the full text)

Nabors Industries Ltd. (NYSE:NBR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Nabors Industries Ltd. (NYSE:NBR) at the end of the first quarter, which was 19 in the previous quarter. In the second quarter of 2025, Nabors Industries Ltd.'s (NYSE:NBR) revenue from operations totaled $833 million, compared to $736 million in the previous quarter. While we acknowledge the potential of Nabors Industries Ltd. (NYSE:NBR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Nabors Industries Ltd. (NYSE:NBR) and shared the list of best beaten down stocks to buy. In its Q1 2025, investor letter Miller Value Deep Value Strategy shared its optimistic view of Nabors Industries Ltd.'s (NYSE:NBR) acquisition of Parker Drilling. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.